The 2001 and 2003 Tax Cuts: A Response to Jenn and Marron

Alan J. Auerbach, Peter R. Orszag, and William G. Gale


In previous work, we have estimated the long-term revenue costs of the 2001 and 2003 tax cuts, assuming they are made permanent and are not gradually eroded by the Alternative Minimum Tax, to be about 2 percent of GDP, roughly the same size as the actuarial deficits over an equivalent time period in Social Security and Medicare Part A. Jenn and Marron (2004) criticize our calculation of the costs of both the tax cuts and the entitlement trust fund shortfalls. This paper responds to their criticisms and evaluates the alternative measures and concepts they propose using.